View more on these topics

Consumer View: Footing the care bill

Who pays for long-term care is a delicate subject des- igned to raise the blood pressure of millions of carers and their families, who foot the bill in terms of stress, time and money to look after elderly relatives.

A report from the Joseph Rowntree Foundation calls for a national debate on the best way of sharing the cost between the state and individuals.

The system is unfair and in need of reform but while there is no denial that a debate is vital, it is arguable that we are all looking at the problem from the wrong starting point.

Why should the state pay for anything other than medical treatments if the individual or families can afford to do what is their duty to elderly relatives. Why should the care of the elderly be something the state takes on – just because the family see their elderly relatives as a burden?

This is of obvious concern to financial institutions and intermediaries because the industry needs to develop appropriate products for those who can afford to fund their own long-term care.

The Joseph Rowntree Trust argues that the system is unsustainable because it does not provides a clear cut set of entitlements according to how much care people need, or a well accepted set of rules about how much they should contribute according to ability to pay.

One of the major problems is the lack of consistency in the way those needing care are treated. There is a need to reform the system that assesses financial aid for nursing care according to the diagnosed condition. Some people get all costs paid by the NHS and others receive very little, even though they might face similar-sized care bills.

One anomaly the report points out is that those with dementia, who need large amounts of personal assistance with daily tasks, may receive little or nothing because they do not require nursing. They are not ill, but simply suffering from old age.

The report suggests that those on low incomes who have to give up almost all of their pensions before getting local authority help for residential care should be given greater help. It says that the 18.80 a week they keep in pocket money undermines their dignity as independent adults and could be doubled for a relatively modest public cost of 240m.

However, the controversial aspect of the report is the suggestion that the extent to which people are required to use the proceeds of selling their homes before they are eligible for local authority help with care costs should be restricted.

The report suggests raising the threshold for such help from 20,500 to 100,000 would mean that someone selling an average-priced home would not have to spend more than half the proceeds on paying for residential care. “This would create a more balanced sharing of costs between individuals and the state,” says the report. But why should the millions of taxpayers who do not own their own homes and have no assets, subsidise the inheritance of families where the children are too mean, lazy or uncaring to accept responsibility for their elderly relatives?

State help whether it is pensions, disability benefits, or long-term care costs are meant to be a financial safety net for those unable to look after themselves – not a subsidy for the property-owning middle classes. It is not a popular view but why shouldn’t these families be obliged to use the sale proceeds of their parents’ home to fund their long-term care. In most cases, it is open to these families to take the elderly parent into their own home and provide the care themselves with back up from doctors and nurses. Equity-release plans could be used if the family did not want to sell the parent’s home.

The report’s author, JRF special adviser Donald Hirsch, said: “We need a system that is fair and clear to users.”

True, but why should this involve asking the relatively poor to subsidise the relatively rich?


Equitable drops case against Ernst & Young

Equitable Life has dropped its 700m claim against its former auditors Ernst & Young.The case collapsed with Equitable agreeing to make a contribution to E&Y’s legal costs.In a letter to policyholders Equitable chairman Vanni Treves says its case, which cost the firm 30m to bring to the High Court, had been fatally undermined by the […]

When Property investments go pear-shaped

In this series of articles, I am looking at the main asset classes with regard to their recent, present and short-term future investment returns and volatility. I am also highlighting the use of the various asset classes in different client portfolios.

A split decision

Anthony Bolton is the stuff of legend but, says Hargreaves Lansdown head of research Mark Dampier, Fidelity has confused the issue of his retirement and set the speculation mill racing with the controversial split of the special sits fund

Nobody expects the Spanish Inquisition

Paul Fidell, Head of Business Development (Investments), writes about one of the primary challenges for those involved in estate planning. He looks at dealing with investment uncertainty in these low growth, low inflation but still volatile investment conditions. Protection of capital, to leave something for beneficiaries, is a fundamental objective of many people’s plans for […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment